#HFSC

16 04, 2024

DAILY041624

2024-04-16T17:10:39-04:00April 16th, 2024|2- Daily Briefing|

House GOP Takes on New Merger Guidelines

The House Small Business Committee today sent a GOP letter to the FTC and Justice Department  strongly protesting new merger guidelines (see FSM Report MERGER13) on grounds that they sharply curtail needed small-business capital.

House Hikes Iran Sanctions

Working through a series of sanctions bills in the wake of recent geopolitical developments, the House yesterday voted 294-105 to advance H.R. 5921, a bill introduced by Rep. Huizenga (R-MI) that prohibits Treasury from authorizing transactions by U.S. financial institutions in connection with Iranian imports or exports other than food, medicine, and other humanitarian assistance.

House Passes Bill Targeting China-Iran Petroleum Trade

Continuing its response to recent geopolitical events, the House yesterday voted by a 383-11 margin to pass H.R. 5923, a bill from Reps. Lawler (R-NY) and Gottheimer (D-NJ) that would require the President to periodically determine if any Chinese financial institutions have purchased petroleum or petroleum products from Iran, stating that U.S. financial institutions also may not open or maintain certain accounts with Chinese institutions that have done so.

Warren Again Targets OCC Merger Decisions

Continuing recent attacks on the OCC’s approach to mergers, Sens. Warren (D-MA) and Blumenthal (D-CT) yesterday sent a letter to Acting Comptroller Hsu sharply criticizing the agency’s decision first to allow NYCB to acquire Flagstar bank and then do the same shortly thereafter for Signature.

OCC Toughens LCR, NSFR via New Reporting Requirements

The OCC today sought public comment as required by law for …

12 04, 2024

Al041524

2024-04-12T16:37:57-04:00April 12th, 2024|3- This Week|

The CFPB Stand-Off

On Tuesday, the HFSC Financial Institutions Subcommittee holds yet another hearing which Republicans hope will so embarrass the CFPB that their decades-long quest to redesign or even kill it gains traction ahead of critical litigation and the national election.  The nominal topic of the hearing is the Bureau’s financial audit, and Republicans will surely make as much of it as they can to damage Director Chopra’s leadership.  However, the real target is the Bureau’s race to finalize a series of substantive actions ahead of its own political challenges should litigation and the election go against it.  The most immediate rule on the GOP’s firing line is the credit-card late-fee standard (see FSM Report CREDITCARD37), a rule now enmeshed in court decisions and challenges of unprecedented intricacy that nonetheless appear likely leading to a near-term injunction blocking the rule as lenders devoutly desire.

Al041524.pdf

12 04, 2024

DAILY041224

2024-04-12T16:38:09-04:00April 12th, 2024|2- Daily Briefing|

Barr, Tillis Warn CFPB Against Mandatory-Arbitration Ban

HFSC Financial Institutions Chair Barr (R-KY) and Sen. Tillis (R-NC) sent a letter to the CFPB today threatening to invoke the Congressional Review Act to overturn any newly-proposed mandatory-arbitration ban from the CFPB, warning that it would violate the CRA.  This is based on the enactment of a reversal of the agency’s prior ban in 2017 which the Members state now cannot be vitiated by any proposal close to the one revoked.

IOSCO Adds CD, AI Workstreams to Revised Work Plan

IOSCO today announced revisions to its 2024 work plan, adding new workstreams to address opacity and illiquidity in the single-name CDS market as well as the integrity, financial stability and investor protection associated with AI along with monitoring financial-asset tokenization.

Daily041224.pdf

11 04, 2024

DAILY041124

2024-04-11T17:01:29-04:00April 11th, 2024|2- Daily Briefing|

Bipartisan Bill Seeks Barriers to Financial-Infrastructure Ransom Payments

Ahead of next week’s HFSC hearing, Chair McHenry (R-NC) and Rep. Pettersen (D-CO) introduced the Ransomware and Financial Stability Act, a bill to require FMUs, large securities exchanges, and certain technology-service providers to notify Treasury before paying a ransom and come under numerous restrictions should they do so.

Waters Plans FHLB-Reform Legislation

Sharply criticizing FHLB backstops for troubled banks, HFSC Ranking Member Waters (D-CA) stated that she is drafting legislation to implement a number of the Congressional recommendations outlined in FHFA’s recent FHLB-reform report, including readying a bill to double the FHLB system’s required contributions to affordable housing and prevent the banks from making good as banks go bad.

Daily041124.pdf

1 04, 2024

Daily040124

2024-04-01T16:24:02-04:00April 1st, 2024|2- Daily Briefing|

FRB-NY: Experience Begets Overdraft Fee Knowledge

Perhaps reflecting the Biden Administration’s examination of overdraft fees, a new report from the Federal Reserve Bank of New York staff on overdraft credit found that experienced overdrafters are roughly twice as likely to know their bank’s overdraft fee than customers who have not overdrawn in the past year.  The report also finds that half of customers surveyed did not know their bank’s overdraft fee, which the report calls “potentially worrisome,” but notes that 41 percent of respondents are also indifferent to their bank’s overdraft policies.

Barr Takes Over CFPB Card-Fee Fight

As anticipated, HFSC Financial Institutions Subcommittee Chair Barr (R-KY) has introduced H.J. Res. 122, the same CRA resolution overturning CFPB’s late fee rule introduced last week by freshman Rep. Ogles (R-TN).  Reports indicate poor communication between the Chair and junior member, and we expect this resolution to be the one that moves forward.

Daily040124.pdf

26 03, 2024

DAILY032624

2024-03-26T16:39:52-04:00March 26th, 2024|2- Daily Briefing|

CBO Flags Long-Term Fiscal Risk to Financial Stability

CBO’s latest long-term fiscal forecast now includes a financial-stability warning absent from the Fed’s recent analysis (see Client Report SYSTEMIC97) and FSOC’s annual report (see Client Report FSOC29): the rising U.S. debt burden.

Chopra Expands CFPB Attack to Card Rewards

Undaunted by a CBA audience suing him on many actions, CFPB Director Chopra today gave a rousing defense of his agency’s credit-card late fee rule (see FSM Report CREDITCARD37), making clear he will vigorously defend it in the courts.

CFPB/FTC Press for More Tech-Finance Enforcement

Building on the Bureau’s recent efforts to limit AI use in comparison-shopping and other consumer-finance applications (see FSM Report CONSUMER56), the CFPB joined the FTC today in issuing a statement coordinating federal and state enforcement efforts against generative AI in particular and digital consumer-finance products more generally.

HFSC, AG Republicans Press SEC on Crypto-Custody Standards

HFSC Chair McHenry (R-NC) and House Ag Chair Thompson (R-PA), alongside 46 Republican members today sent a letter to SEC Chair Gensler calling for clarification the position on special purpose broker dealer’s (SPBD) ability to custody non-security digital assets, the agency’s willingness to address SPBD non-compliance, the regulatory classification of ETH, and the SEC’s position regarding Prometheum’s custody services announcement.

Daily032624.pdf

25 03, 2024

DAILY032524

2024-03-25T16:46:05-04:00March 25th, 2024|2- Daily Briefing|

House GOP Resolution Challenges FSOC Designation Guidance

HFSC Vice-Chairman Hill (R-AR) introduced H.J. Res 120 on Friday to disapprove of FSOC’s guidance on nonbank financial company systemic designations (see FSM Report SIFI36).  The CRA resolution follows GOP criticism of the guidance at recent hearings (see Client Report FSOC30) and S.3601 from Sens. Rounds (R-SD) and Sinema (I-AZ), which would require FSOC to consider “alternative approaches” prior to systemic designation.

Hsu, Cook Warn Banks re AI Fair-Lending Risk

Acting Comptroller Hsu today stressed the importance that banks understand their use cases for AI and utilize it in a controlled manner, reiterating longstanding agency concerns about bad learning models leading to credit discrimination (see FSM Report AI).  FRB Gov. Cook today also noted that, while the FRB cannot address inequality within its mandate, it can and is looking to ensure that AI use does not lead to unfair lending.

Daily032524.pdf

21 03, 2024

REFORM231

2024-03-21T15:27:18-04:00March 21st, 2024|5- Client Report|

Republicans Blast Basel, Global Standard-Setting

Today’s HFSC hearing on global governance featured expected Republican attacks on what they called the opaque nature of U.S. interactions with international organizations, with Chairman McHenry (R-NC) promoting a draft bill requiring regulators to report dealings with global standard-setting groups to Congress.  Much of the hearing otherwise focused on the Basel III Endgame Proposal, with criticism coming not just from the GOP but also some Democrats, especially Rep. Torres (D-NY) who denounced the “Europeanization” of the U.S. financial system.

REFORM231.pdf

7 03, 2024

DAILY030724

2024-03-07T16:51:03-05:00March 7th, 2024|2- Daily Briefing|

HFSC GOP Press Discount-Window Reform, Slow-Go on Liquidity Risk

Building on questioning at a recent HFSC hearing (see Client Report LIQUIDITY34), Financial Institutions Subcommittee Chair Barr (R-KY) led all Republican members of his subcommittee in a letter to Chair Powell, Chair Gruenberg, and Acting Comptroller Hsu urging them to address stigma and operational issues associated with the discount window.

Powell Reiterates: Capital Rules Will Change

Today’s Senate Banking hearing with Chair Powell covered much of the same ground as the Chair’s appearance before HFSC (see Client Report FEDERALRESERVE75) with Democrats focusing on housing affordability and Republicans expressing their satisfaction with Mr. Powell’s statement that the Basel III proposal may have to be withdrawn and re-proposed.

House Judiciary Now Says 12 Large Banks Colluded with FinCEN

Prior to the House Judiciary’s Select Subcommittee on the Weaponization of the Federal Government hearing today on large bank “collusion,” the subcommittee yesterday published a report finding that FinCEN and the FBI engaged in backchannel discussions with large financial institutions to gather private financial data.

BCBS Proposes GSIB Window-Dressing Revisions

As anticipated, the Basel Committee on Banking Supervision today released a consultation on revisions to the GSIB assessment framework concerning window dressing.

House Republican Targets Interest on Reserves

Following up on yesterday’s HFSC hearing (see Client Report FEDERALRESERVE75), Rep. Davidson (R-OH) has introduced legislation (H.R. 7562) to prevent Federal Reserve Banks from paying interest on excess reserves.

Daily030724.pdf

6 03, 2024

FEDERALRESERVE75

2024-03-06T16:07:02-05:00March 6th, 2024|5- Client Report|

Chair Powell Calls Basel III Re-Proposal “Very Plausible”

As expected, Republicans took turns grilling Chair Powell on the Basel III endgame proposal and calling for its withdrawal, and were likely pleased with the results. When questioned by Chair McHenry (R-NC) and Financial Institutions Subcommittee Chair Barr (R-KY), Mr. Powell stated that he expects “broad and material changes” to the proposal and stated that a re-proposal would be a “very plausible option,” calling the amount of negative comments regarding the proposal “unlike anything I have seen.”  Democrats made affordable housing their primary area of attack, following up on previous Democrat-led letters sent to Chair Powell calling for him to cut interest rates to reduce the burden on housing and construction costs.  Mr. Powell responded to housing concerns by acknowledging the structural housing shortage in the U.S. but reiterated the Fed’s dual mandate and stated that targeting the housing market is outside their jurisdiction.  In addition to monetary policy, much of the questioning also addressed fiscal policy, where Mr. Powell again attempted to stay aloof.  Ahead of today’s hearing, Chair McHenry and Subchair Barr led all HFSC Republicans in sending a letter to Mr. Powell, Chair Gruenberg, and Acting Comptroller Hsu demanding the regulators withdraw the capital proposal.  A bipartisan House coalition of 38 lawmakers led by Reps. Luetkemeyer (R-MO) and Williams (D-GA) also sent a letter to Mr. Powell criticizing the Fed’s proposal to reduce the debit-card interchange fee cap, warning of the proposal’s impact on LMI and underbanked communities.…

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